Pay Agent Report Adds Counties to Locality Pay, Calls for GS Overhaul
More federal employees are in line for locality pay, as the President’s Pay Agent released its annual report.
The pay agent recommended that the counties of Clallam, Washington and Jefferson, Washington be added to the Seattle-Tacoma locality pay area, where employees currently receive an adjustment of nearly 30 percent over the General Schedule (GS) base table.
However, the raise will not hit employees’ paychecks in those areas until at least 2025, as OPM must first craft and publish regulations to implement the pay agent’s decision.
The pay agent is comprised of Office of Personnel Management (OPM) Director Kiran Ahuja, Office of Management and Budget (OMB) Director Shalanda Young, and Acting Labor Secretary Julie Su, and acts upon the recommendations of labor leaders and political appointees, including the Federal Salary Council.
A report on locality pay is required each year under federal law. The government uses locality pay to offset some of the difference in compensation between public and private sector workers in certain geographic areas.
Calls for General Schedule Overhaul
In the report, the pay agent called for an overhaul of the General Schedule (GS) system, saying the way the GS system uses locality pay is outdated and doesn’t account for different occupations.
“The current pay comparison methodology used in the locality pay program ignores the fact that non-federal pay in a local labor market varies substantially between different occupational groups. As currently applied, locality payments in a local labor market may leave some mission-critical occupations significantly underpaid while overpaying others,” the report stated.
It said relying on one average pay rate per area “has lacked credibility since the beginning of locality pay in 1994 to such a degree that the statutory formula for closing pay gaps has been overridden either by Congress or by successive presidents every year since that first year.”
The pay agent estimates it would cost $22 billion to bring GS salaries in line with private sector counterparts, up from $19 billion in the 2022 report, meaning the gap between public and private sector salaries is widening.
The GS system itself is one of the top reasons cited by Chief Human Capital Officers (CHCOs) for struggles with recruitment and retention.
Fed Raises, Four New Locality Pay Areas
Nevertheless, federal employees are set to receive a 5.2 percent pay raise in January, including a 4.7 percent basic pay raise and a .5 percent average boost to locality pay. It’s the largest in four decades.
About 33,000 employees will likely see bigger raises for the first time, as their four areas were added to locality pay for 2024. Those areas are Fresno-Madera-Hanford, California, Reno-Fernley, Nevada, Rochester-Batavia-Seneca Falls, New York, and Spokane-Spokane Valley- Coeur d’Alene, Washington-Idaho.
OPM is working to implement those raises ahead of the 2024 pay cycle.